The Reality About Gasoline Prices -- And What To Do About It
Gasoline prices have been steadily climbing for several months, and Americans are feeling the pain at the pump. The possible culprits (from greedy oil execs to Mideast turmoil) are as plentiful as the proposed solutions (more offshore drilling, green energy or government reserves). But what is really driving prices up? And what, if anything, can be done about it? Let’s take a moment to fill up on information about our fuel.
1. Fighting in Libya is sending gas prices higher.
Libya is not a big enough global oil supplier for the battles there to have a meaningful effect on gas prices. In the 1970s and early 1980s, Libya was a major U.S. supplier, selling us around 700,000 barrels of oil per day. But today, we import less than 50,000 barrels per day from Libya, a tiny fraction of the 9.2 million barrels per day the United States imported in 2010.
Worldwide, the story is no different: Of the 86 million barrels consumed globally each day, less than 2 percent come from Moammar Gaddafi’s regime.
So why are gas prices up? Though Gaddafi’s fate is largely irrelevant to the oil market, unrest throughout the greater Middle East is not. The Persian Gulf region produces almost 24 million barrels of oil per day, more than 25 percent of global oil consumption.
The Arab spring that has brought protests to Egypt, Saudi Arabia, Bahrain and Yemen makes markets nervous, and when markets fret over a possible disruption to oil supplies, gas prices rise whether the disruption materializes or not.
2. Tapping the Strategic Petroleum Reserve (SPR) is a smart way to reduce gas prices. The U.S. government maintains a 727 million-barrel oil reserve that is 38 days’ worth at current levels of consumption to protect against potential supply disruptions. But just about every time prices rise, politicians want to access the oil in the SPR reserve to increase supply and bring prices back down. Sen. Charles Schumer (D-N.Y.), for instance, has been calling for oil releases from the SPR for more than a decade. In a letter to President Bill Clinton in 1999, he endorsed the release of several hundred thousand barrels a day from the SPR because, according to a news release about the letter, oil prices had made a meteoric ascent to nearly $25 per barrel.
Had Clinton dipped into the reserve then, as Schumer requested, we almost certainly would have gotten a raw deal. What if that $25-per-barrel oil could be replenished only at $75 per barrel? Tapping the SPR makes the government an oil speculator, and any nation running record deficits that becomes a commodity trader is playing a dangerous game.
The SPR exists to buy time in a true supply emergency. If we use it as a political tool to keep voters happy by stemming rising gas prices, we may be forced to buy back oil at even higher prices, or we may be left with an insufficient supply in a real crisis.
3. Oil companies produce less in the spring to make gas prices increase.
Almost every year, gasoline prices rise in the spring. At the same time, refineries produce less fuel. This isn’t because oil companies want to keep inventories low to drive prices higher. It’s because what’s in our gasoline, specifically, the butane content that changes from season to season.
Butane is a cheap ingredient in gasoline that boils at low temperatures. In winter, this isn’t a problem. But in summer, butane evaporates from gas, polluting the air while leaving us with less fuel in the tank than we paid for. As temperatures rise, refineries replace butane with more costly ingredients and draw down winter inventories just as the beach season begins. Chemistry, not corporate conspiracy, limits supply.
4. The Obama administration is driving up gas prices.
Sen. Mitch McConnell (R-Ky.) says EPA regulations are a back-door national energy tax that pushes prices up. Former Alaska governor Sarah Palin says the White House drilling moratorium shows President Obama’s culpability in the high gas prices is
hurting Americans.
Blaming the president for rising gas prices is nothing new, and it’s a bipartisan tactic. In 2004, Sen. John Kerry (D-Mass.) blamed President George W. Bush for higher gas prices and for continuing to fill the Strategic Petroleum Reserve as oil prices climbed.
Just one problem: Even if domestic supplies were developed, American presidents couldn’t really control oil prices. The U.S.government has estimated that there are 18 billion barrels of oil in the outer continental shelf of the lower 48 states that are off limits to development. That may sound like a lot, but it is only about 21 / 2 years of supply for the United States, and it would take several years to allocate leases and drill exploratory wells. Even if the estimated 10 billion barrels of oil in the Arctic National Wildlife Refuge were available for development, today’s policy decisions would have no impact on gasoline supplies
for as much as a decade. Obama can’t dictate what you’ll pay for premium fuel tomorrow.
5. Americans can’t live without cheap gas.
Yes, Americans love to drive, and Americans love cheap gas. But across an ocean, there’s a continent filled with people a lot like us who’ve lived with high gas prices for years. They’re called Europeans.
While U.S. gasoline heads toward $4 per gallon, Europeans have been paying much higher prices for years because of high taxes on fuel. This month in Britain, gas hit 6 pounds, or about $9.76 per gallon. Because gas is so costly, Europe’s per capita energy use is half that of the United States, leaving Europe less vulnerable to oil price shocks yet not undermining its citizens’ standard of living.
The United States, built on cheap oil, is much less densely populated than the Old World, with more wide-open spaces to traverse. But that doesn’t mean we can’t embrace some of the things that have helped Europeans keep their gasoline bills down such as high-speed rail, public transportation, and green energy.
In fact, Americans have shown that they can adjust their behavior when faced with sticker shock at the pump. As gas prices rose from $2.31 per gallon in 2005 to $3.30 per gallon in 2008, sales of the Toyota Prius eclipsed those of the Ford Explorer, and public transit use reached a 50-year high. When it costs $30 to fill up a Geo Metro with regular, all options are on the table.
What About Additives?
Gasoline additives increase gasoline's octane rating. They act as corrosion inhibitors or lubricants, thus allowing the use of higher compression ratios for greater efficiency and power. However some additives carry heavy environmental risks. One of the first additives used was an anti-knock compound called tetraethyl lead.
Types of additives include metal deactivators, corrosion inhibitors, oxygenates and antioxidants. The Clean Air Act was put into place in January 1995 in the United States of America as part of the efforts of the Environmental Protection Agency. This act requires deposit control additives (DCAs) be added to all gasolines. This type of additive is a detergent additive that acts as a cleansing agent in small passages in the carburetor or fuel injectors. This in turn serves to ensure a consistent air and fuel mixture that will contribute to better gas mileage.
Some other additives are:
Combustion catalyst: any organometallic compound which lowers the ignition point of fuel in the engine combustion chamber reducing the temperature burn from 1200 degrees to 800 degrees F.
Catalyst additives: These prolong engine life and increase fuel economy
Burn rate modifiers: These increase the fuel burn time, resulting in an increased fuel efficiency
Stabilizers/demulsifiers/dispersants: These additives prolong the life of fuel and prevent water contamination.
Corrosion inhibitors: These prevent corrosion of the fuel tank and fuel system.
Deposit control additives: These act as detergents, and clean the engine.
How well do these additives work? There are many products on the market that claim to improve gas mileage and reduce harmful emissions that pollute. Some of them only work marginally well, while some of them do not work at all. Nearly all of them are sold over the internet. Some are outright scams, while others work to the extent we see some improvement in automotive performance.....but not much. Some represent companies that have been in business for a measureable length of time and are slowly but surely gaining recognition.
There are four agencies that you should know about before you invest in any product for your car or truck. There are a number of do's and dont's before you take any action that involves the old jaloppy in your garage or driveway.
Here are the agencies:
a) The Federal EPA. This is Obama's watchdog that is chartered with protecting the air we breathe.
b) The Federal Consumer Protection Agency. This agency guards against internet scams. Of particular interest are the "gas pills" that are dropped into the gas tank with a refuelling.
c) The Southwest Research Laboratories. This is a private research agency that focuses on fuels, testing of fuel performance in automobile and truck engines, emission control devices and strategies, and engineering recommendations for truck and fleet operators.
d) The California Air Resources Board (CARB). This agency operates within the State of California and is responsible for the state formulating and implementing air pollution laws.
Here are the "do's" and the "don't"s:
a) Don't put any additive in your car or truck's fuel system before you have checked with the manufacturer to see if your action is okay as far as your vehicle's warranty limitations.
b) Do not operate your vehicle with any fuel additive before consulting with the Federal agencies listed above.
c) Do not buy a large supply of fuel additive before you have run tests on your car or truck to see how well these additives really work.
d) Do not rely on the recommendations of others before using the additive in your own vehicle. What worked out okay in John's Durango may not work out well in your Ford.
e) Keep detailed records of everything you do. Above all, keep detailed records of the information you see at the gas pump and your vehicle's oddometer.
f) DO NOT PERFORM A PARTIAL FILL OF YOUR VEHICLE'S FUEL TANK. You will louse up your test results and will learn nothing about the effect of fuel additives on your vehicle.
g) DO NOT "TOP OFF" YOUR VEHICLE WHEN YOU ARE REFUELLING. WHEN THE GAS PUMP CLICKS "OFF" THAT IS IT.
h) Do not corrupt the fuel your vehicle normally uses with other stuff that will louse up your testing. Examples of this are the use of a higher octane rating fuel, introducing another additive into your gas tank, or using an octane booster such as methanol, ethanol, or a benzene derivative.
How good is the additive?
The proof of the pudding (or the gas tank) is how much money can a fuel additive actually save you ? Here is a quick layman's test to find out.
Step One: Fill your tank with the gasoline or diesel fuel that you normally employ. Remember....DO NOT TOP OFF when you fill up.
Step Two: Record the amount of fuel that you pumped into your vehicle, as shown on the gas pump.
Step Three: Record the oddometer reading on your vehicle while you are still in the gas station. Do not drive away and then remember to do it while you are out on the road.
Step Four: Drive your vehicle until your tank level reaches 1/4 full.
Step Five: Drive into your service station to refill. Record the oddometer reading on your vehicle. Record the amount of fuel you pumped into your vehicle on this visit, as shown on the gas pump.
Step Six: Subtract the oddometer reading from Step Three from the oddometer reading you have recorded in Step Five. This will tell you how many miles you have driven since your last visit to the service station
Step Seven: Divide the miles driven from Step Six by the amount of fuel pumped into your vehicle from Step Five. This will give you the miles per gallon using untreated fuel for Run One.
Run Two:
Repeat Steps One Through Seven. Compute the miles per gallon as described in Step Seven. If your technique is consistent, the results from Run One and Run Two should approximate each other. These runs will show how your vehicle will perform with untreated fuel in its everyday operation.
Run Three:
Step One: Put in the recommended amount of additive before you start filling your gas tank. Fill your tank with the gasoline or diesel fuel that you normally employ. This is to ensure that the additive and your fuel amounts will mix properly in your gas tank. It is especially important that you NEVER put in a second additive in your tank when doing your initial fill. Also, Remember....DO NOT TOP OFF when you fill up. Let the pump click off when your filling is done.
Step two: Record the amount of fuel that you pumped into your vehicle, as shown on the gas pump.
Step Three: Record the oddometer reading on your vehicle while you are still in the gas station. Do not drive away and then remember to do it while you are out on the road.
Step Four: Drive your vehicle until your tank level reaches 1/4 full.
Step five: Drive into your service station to refill. Record the oddometer reading on your vehicle. Put in the recommended amount of additive before you start filling your gas tank. Record the amount of fuel you pumped into your vehicle on this visit, as shown on the gas pump. Once again, remember DO NOT TOP OFF your refill.
Step Six: Subtract the oddometer reading from Step Three from the oddometer reading you have recorded in Step Five. This will tell you how many miles you have driven with treated fuel since your last visit to the service station.
Step Seven: Divide the miles driven from Step Six by the amount of treated fuel pumped into your vehicle from Step Five. This will give you the miles per gallon using treated fuel for Run Three.
Run Four:
Repeat Steps One Through Seven. Compute the miles per gallon as described in Step Seven. If your technique is consistent, the results from Run Three and Run Four should approximate each other. These runs will show how your vehicle will perform with treated fuel in its everyday operation.
As soon as you have completed the testing of your vehicle with untreated fuel versus that with treated fuel, you should have a good idea about the performance of a fuel additive in your vehicle.
You can then calculate the gross savings that the additive will provide you as you operate your vehicle. Use 1000 miles as a good basis of comparison. Let's say you drive 1000 miles. Using untreated fuel, your vehicle should do 25 miles per gallon. Thus, your vehicle will consume 40 gallons of fuel. At $4.00 a gallon, your cost will be $160.00.
Using treated fuel, your vehicle should perform at 35 miles per gallon. Your vehicle will thus consume around 28.5 gallons of fuel for the 1000 miles of your comparison. At $4.00 a gallon, your cost will be lower than $120.00 for the same 1000 miles.
Your savings in this example will be about $40.00.
This example shows that treated versus untreated fuel can make a difference in the amount you can save operating your vehicle.
More precise calculations may show a bigger difference.
